47) Which approach to regulating a natural monopoly tries to set the regulated p
ID: 1164567 • Letter: 4
Question
47)
Which approach to regulating a natural monopoly tries to set the regulated price equal to the firm's marginal cost of production?
(2pts)
cost regulation
profit regulation
output regulation
price regulation
social justice regulation
48)
To implement the approach to regulating a natural monopoly known as “profit regulation,” regulators would require the firm to charge a price equal its
(2pts)
average fixed cost
marginal cost.
marginal revenue
average variable cost
average total cost
49)
OSHA, the CPSC, and the EPA are in the alphabet soup bowl of social regulatory agencies that are primarily concerned with which of the following?
(2pts)
mergers and acquisitions among firms in different industries
the profits being earned by oligopolies and monopolies
the conditions under which goods and services are produced and the safety of these item for the consumer
preventing firms from growing too large
the prices that firms charge for their products
50)
A key component of the economist's approach to looking at the effects of regulation is which of the following?
(2pts)
Costs and benefits are irrelevant to judging whether or not a regulation is a good one.
Regulations impose costs without yielding any benefits.
Regulations have unintended consequences that may cause results opposite to what was intended.
Regulations yield benefits without imposing any costs.
Explanation / Answer
47) Correct option is price regulation. Price regulation approach to regulating a natural monopoly tries to set the regulated price equal to the firm's marginal cost of production. Since social welfare is maximum when price of a commodity is fixed at the level where it equals marginal cost of production of the commodity, it is proposed that the maximum price for the monopoly should be fixed equal to the marginal cost.
48) Correct option is average total cost. In order to implement the approach to regulating a natural monopoly known as “profit regulation,” regulators would require the firm to charge a price equal its average total cost. This is done so that the natural monopoly can charge enough to cover its average costs and earn a normal rate of profit, so that it can continue operating, but prevent the firm from raising prices and earning abnormally high monopoly profits.
49) Correct option is the conditions under which goods and services are produced and the safety of these item for the consumer. OSHA, the CPSC, and the EPA are primarily concerned with the conditions under which goods and services are produced and the safety of these item for the consumer. EPA and OSHA wish to work together to maximize the efforts of both agencies to ensure the efficient and effective protection of workers, the public, and the environment. OSHA stands for Occupational Safety and Health Administration, EPA stands for Environmental Protection Agency and CPSC stands for Consumer Product Safety Commission.
50) Correct option is Regulations have unintended consequences that may cause results opposite to what was intended.
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